casualty loss

casualty loss

n. in taxation, loss due to damage which qualifies for a casualty loss tax deduction. It must be caused by a sudden, unexpected or unusual occurrence such as a storm, flood, fire, shipwreck, or earthquake, but would not include gradual damage from water seepage or erosion.

To help taxpayers better prepare for and effectively cope with the unexpected, Jackson Hewitt Tax Service(R), the nation's second largest tax preparation service, announces the availability of an online "Disaster Relief Kit" featuring enhancements to the company's extensive natural disaster and casualty loss resources.

When a property or casualty loss is less than the deductible amount or is not covered by insurance, CPAs can help companies recoup some of these losses by putting a team and a process in place to immediately investigate the loss and pursue recovery in court against the responsible parties.

The amount of the casualty loss from partial destruction of property is the lesser of the taxpayer's adjusted basis of the property or the difference in the property's fair market value (FMV) immediately before and after the casualty; Regs.

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